"The device is tighter and more physically beautiful than the iPod Touch and it's got a better UI, the main menu's scrolling so natural through the swipe gestures. There's a little note on the side, under the volume toggle—"Hello from Seattle." The power button is up top. The home button is nice and prominent, a bar rather than a round button on the Touch. It's smaller. And the accelerometer is more swift in responding to repositioning; images rotate very fast."

That's good to hear: Microsoft's mobile UIs have historically been a joke, and a better Zune is good news for Windows Mobile 7, which is supposed to launch next year.

But we're still skeptical that the new Zune will be able to take meaningful market share away from Apple's iPod touch. The main reason is that the iPod touch now has a massive advantage in the iPhone app store -- games, Internet apps, etc. -- that the new Zune doesn't have. And given that the Zune runs on Windows CE -- a platform that no consumer companies are writing apps for, and probably won't as long as the install base is tiny -- it's going to be hard to catch up.